King’s Caution

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Official interest rates have now been at an historic low of 0.5 per cent for more than three years. Yet the rates banks charge to borrowers are rising and the economy remains flat on its back.

Bank credit is shrinking. Companies have repaid more than £80 billion to their banks since the collapse of Lehman Brothers while small firms struggle to get loans at reasonable rates. More clearly needs to be done to boost lending. But the body whose prime responsibility it is, the Bank of England, has been dragging its feet.